DAYARAM LALJI BHANUSHALI HUF,MUMBAI vs. ITO 42 (2)(1), MUMBAI

The only effective ground raised by the assessee relates to challenging the order of the CIT(A) in upholding the additions made by the AO under section 69A of the Income-tax Act.

The learned AR appearing on behalf of the assessee reiterated the same arguments as were raised before the Revenue Authorities and relied upon his written submissions.

On the other hand, the learned DR relied upon the order passed by the Revenue Authorities.

We have heard the learned counsels for both parties, perused the material placed on record, the judgments cited before us, and the order passed by the Revenue Authorities. From the records, we noticed that the assessee is a Hindu Undivided Family (HUF) which filed its return of income for the year under consideration, declaring total income at Rs. 2,75,140. Subsequently, the case was selected for scrutiny on the basis of a search conducted in the case of Bhanushali Group, Vishal Gurnani and others. During the course of the search, certain Excel sheets were allegedly found from the office premises of Praveen Bhanushali, an associate of Vinod Bhanushali, wherein details of loan transactions and repayments were found. Based on this search material, the AO was of the view that the assessee had received accommodation entries and, accordingly, made an addition aggregating to Rs. 1,37,50,000 received by the assessee during the year under consideration.

In support of its arguments, the assessee submitted that no accommodation entry was received by it. However, in the earlier years, the assessee had given unsecured loans to Vinod Bhanushali HUF and Smt.

In this regard, we notice that, in order to prove the identity, the assessee had submitted the names, addresses, PANs and Income-tax jurisdiction details of the concerned parties. In order to prove the financial creditworthiness, the assessee had submitted the relevant financial and banking documents. In order to prove the genuineness of the transactions, the assessee had submitted the bank statements of the assessee as well as the concerned parties, highlighting the relevant transactions, along with loan confirmations.

The AO has not pointed out any specific defect or discrepancy in the documents relied upon by the assessee. We further notice that the Assessing Officer had ignored the vital facts placed before him during the course of assessment by way of the aforesaid documentary evidence.

Thus, it is a settled position of law that, in order to establish the nature and source of a credit, the primary onus is on the assessee. In the present case, the assessee has duly discharged the primary onus by establishing the identity of the concerned parties, their creditworthiness and the genuineness of the transactions. The creditworthiness of the parties and genuineness of the transactions have also been supported by the documentary evidence placed on record.

It is also a settled principle of law that where the Assessing Officer relies upon any material collected at the back of the assessee, including a statement of a third party, the assessee is required to be confronted with such material and, where the statement is relied upon against the assessee, an effective opportunity of cross-examination is required to be provided. In the absence of such an opportunity, reliance upon such material or statement may not be sustainable in law.

In this regard, reliance is being placed upon the decisions in the cases of:

Thus, considering the totality of the facts and circumstances of the case and also keeping in view the doctrine of binding precedents and judicial consistency, we set aside the order passed by the learned CIT(A) and direct the AO to delete the impugned additions.

In the result, the appeal filed by the assessee stands allowed.